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Were Hedge Funds Right About Iovance Biotherapeutics, Inc. (IOVA)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) based on that data and determine whether they were really smart about the stock.

Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) shareholders have witnessed an increase in support from the world’s most elite money managers lately. IOVA was in 39 hedge funds’ portfolios at the end of the first quarter of 2020. There were 32 hedge funds in our database with IOVA holdings at the end of the previous quarter. Our calculations also showed that IOVA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Oleg Nodelman EcoR1 Capital

Oleg Nodelman of EcoR1 Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let’s take a peek at the fresh hedge fund action encompassing Iovance Biotherapeutics, Inc. (NASDAQ:IOVA).

How are hedge funds trading Iovance Biotherapeutics, Inc. (NASDAQ:IOVA)?

At the end of the first quarter, a total of 39 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 22% from the fourth quarter of 2019. On the other hand, there were a total of 25 hedge funds with a bullish position in IOVA a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Is IOVA A Good Stock To Buy?

Among these funds, Perceptive Advisors held the most valuable stake in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), which was worth $349.3 million at the end of the third quarter. On the second spot was Avoro Capital Advisors (venBio Select Advisor) which amassed $269.7 million worth of shares. Farallon Capital, OrbiMed Advisors, and Point72 Asset Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Avoro Capital Advisors (venBio Select Advisor) allocated the biggest weight to Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), around 9.1% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, designating 9.1 percent of its 13F equity portfolio to IOVA.

As industrywide interest jumped, key money managers have jumped into Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) headfirst. Acuta Capital Partners, managed by Manfred Yu, initiated the biggest position in Iovance Biotherapeutics, Inc. (NASDAQ:IOVA). Acuta Capital Partners had $12 million invested in the company at the end of the quarter. Henrik Rhenman’s Rhenman & Partners Asset Management also made a $10.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Carl Tiedemann and Michael Tiedemann’s TIG Advisors, and Israel Englander’s Millennium Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) but similarly valued. We will take a look at Integra Lifesciences Holdings Corp (NASDAQ:IART), Healthcare Realty Trust Inc (NYSE:HR), East West Bancorp, Inc. (NASDAQ:EWBC), and Silicon Laboratories (NASDAQ:SLAB). All of these stocks’ market caps are closest to IOVA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IART 22 106793 5
HR 11 37769 -1
EWBC 25 180356 -4
SLAB 20 58924 -6
Average 19.5 95961 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $96 million. That figure was $1345 million in IOVA’s case. East West Bancorp, Inc. (NASDAQ:EWBC) is the most popular stock in this table. On the other hand Healthcare Realty Trust Inc (NYSE:HR) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. Unfortunately IOVA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on IOVA were disappointed as the stock returned -8.3% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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Disclosure: None. This article was originally published at Insider Monkey.